Holding

The assessment was valid, the Board was authorized to levy penal rates and enhanced tariffs, and the orders were lawful, so the appeal was dismissed.

Summary

Jiyajeerao Cotton Mills Ltd. entered into a supply agreement with the Madhya Pradesh Electricity Board, but due to electricity scarcity the State issued two orders in 1975: a Regulation Order limiting consumption and imposing penal rates for excess use, and a Generation Order requiring consumers with captive power to generate as much as technically feasible, with provisions for emergency supply. The Board assessed the mill's captive capacity and directed it to generate additional power; the mill later drew extra electricity without prior Board approval and was billed at penal rates. The mill challenged the assessment and the Board's right to levy penal rates, arguing lack of legal sanction and procedural flaws. The Supreme Court examined the validity of the assessment, the statutory powers under Section 22B of the Indian Electricity Act, 1910, and the Board's authority under Sections 49, 42, and 48 of the 1948 Act, concluding that the assessment was proper, the Board was empowered to impose higher tariffs, and the orders were lawful. Consequently, the mill's claims were rejected and the appeal dismissed.

Issues considered

Was the assessment of the mill's captive power generation capacity by the Divisional Engineer under the Generation Order valid and lawful?
Does Section 22B of the Indian Electricity Act, 1910, together with the Regulation and Generation Orders, empower the Board to levy penal rates for excess electricity consumption?
Can the Board impose enhanced tariffs under Sections 49(1) and 49(3) of the 1948 Electricity Act in addition to the orders issued under Section 22B?
Should the Regulation Order and the Generation Order be read together, and does this affect the Board's right to charge higher rates?
Does the mill's failure to obtain prior permission for emergency supply bar its claim for relief?

Legislation cited

Electricity Act, 1948s. 42(e), s. 48, s. 49(1), s. 49(3)
Essential Commodities Act, 1955
Indian Electricity Act, 1910s. 22B

Subjects

electricity supplypenal ratesregulation ordergeneration ordercaptive powerSection 22Btariff enhancementemergency supplyassessment validityboard authority

Judgment

JIYAJEERAO COTTON MILLS LIMITED AND ANOTHER
A
v.
MADHYA PRADESH ELECTRICITY BOARD AND OTHERS

SEPTEMBER 12, 1988

B [A.P. SEN AND LALIT MOHAN SHARMA, JJ.]

Indian Electricity Act, 1910--Section 22B-Company entering
into agreement with Electricity Board for supply of electricity-Board
supplying additional energy and billing at penal rates-Action of
[
Board-Whether valid and legal.
c Madhya Pradesh Electricity (Supply and Consumption Regula-
tion) Order 1975/Madhya Pradesh Electricity (Generation, Control and
Consumption) Order 1975: Clause 3(i) Regulation Order-Consumers
to reduce consumption-Board entitled to disconnect supply for breach ~

or charge penal rates for excess energy consumed-Generation Order
D provided for assessment of generating capacity of captive power of
consumer.

Words and Phrases: 'Regulate'-Meaning of.

In October 1971 the appellant company entered into an agree-
E ment with the Madhya Pradesh Electricity Board, respondent No. l, for
supply of electricity. The quantity of electricity to be supplied varied
from time to time.

To meet the situation arising out of insufficient generation of
electricity, the State of Madhya Pradesh issued two orders. By the
F Madhya Pradesh Electricity (Supply and Consumption Regulation)
Order, 1975 the consumers were asked to reduce their consumption
failing which they would have to pay charges at penal rates for excess
consumption,_ without prejudice to the Board's power to disconnect the
supply. By the Generation Order, the consumers who had alternative
sources of captive power were required to generate electricity to the
G maximum extent technically feasible, from their own sources of
electricity.

After the assessment of their generating capacity, the appellant
was directed to generate additional electricity of 2,500 K. W. Suh-
;,
Clause (iii) of Proviso to clause 3 of the Generation Order provided that
H if in certain contingencies tnere was reduction in the generation of
978
JIYAJEERAO COTTON MILLS '· ELECTRICITY BOARD 979

electricity by . the consumer; the Board would try to make good thr
deficit against the appropriate charge for it. Under this provision the
A
appellant, on pleading emergency, was supplied additional energy from
time to time. F Jr excess consumption drawn without the Board's prior
approval, the appellant was sent bills at penal rate.

The appellant company challenged the demand before the High B
Court by filing a writ application under Article 226 of the Constitution,
which was dismissed by the High Court except for granting some minor
reliefs.

Before this Court, it was contended by the appellant:

(I) There is no sanction in Law for charging at the Penal rate for
c
the electricity consumed beyond what is permissible under the Genera-
tion Order.

(2) That the assessment of their generating capacity was not made
by the authority empowered to do so. i.e. the Divisional Engineer, and D
(3) that the assessment was based on irrelevant and extraneous consi-
derations.

Dismissing the appeal, it was,

HELD: (I) A perusal of the documents on record, including E
admissions on the part of the appellant company, furnishes unimpeach-
able evidence, ·pr-Ol'ing that the assessment of the maximum feasible
capacity of the appelant's capative power sets was duly made in accord-
ance with the Generation Order, and that the Divisional Engineer, who
had been authorised by the Generation Order to assess the appellant's
generating capacity, reached the conclusion after personally consider- F
ing the matter thoroughly.

(2) In pursuance of the assessment of the generating capacity the
required direction was issued which was acted upon by the parties for a
number of years. The Company not only took steps to generate the
additional energy as was required of it, it also took advantage of the G
provisions of proviso (iii) to clause 3 of the Generation Order and
benefitted by it from time to time. [988A-BI

(3) The appellant company was fully conscious of the fact that it
' ,. was consuming electricity beyond its entitlement under the two Orders.
For several years the Company was particular to obtain the permission H
98(1 SUPREME COURT REPORTS I 1988] Supp. 2 S.C.R.

A of the Board for drawing electricity itl"'excess of what it<was entitled to
by the agreement, as modified by the Regulation Order and the Genera-
tion Order, but later, it not only stopped seeking the advance sanction
in this regard, it did not even care to inform the Board of the excess
drawaL [IOOIB-C; t'-G]

B (4) Section 22B of the Indian Electricity Act, 1910 permits the
State Government to issue an appropriate order for regulating the
supply, distribution and consumption of electricity. I IO JOB]

(5) The expression "regulate" occurs in other statutes also, as for
example, the Essential Commodities Act, 1955, and it has been found
t difficult to give the word a precise definition, It has different shades of
meaning and must take its colour from the context in which it is used
having regard to the purpose and object of the relevant provisions, and
as has been repeatedly observed, the Court while interpreting the
expression must necessarily keep in Yiew the object to be achieved and
the mischief sought to be remedied. [JOIOC·Dl
D
( 6) There does not appear to be any doubt that either under
S. 49( I) of the 1948 Act read with the agreement or under s. 49(3)
or under both the provisions the respondent Board was fully autho-
rised to levy and to make a demand at a higher rate than the usual
tariff. I JO 14F..-F]

(7) The necessity for issuing the two Orders arose out of the
scarcity of electricity available to the Board for supplying to its custom-
ers. The situation did not leave any option to the Board but to make
limited snpply of electricity to its consumers, and it must be held to
have, in the circumstances, the right to stagger or curtail the supply.
F The orders were issued in this background and to make the direction
mentioned therein effective it was considered essential to impose sanc-
tions which could take any reasonable form; either disconnection in
case of gross violation or the lesser sanction of enhanced tariff. Hence
none of the two Orders was illegal or unreasonable.

G Adoni Cotton Mills v. A.P. State Electricity Board, [1976] 4 SCC
68; State of U.P. v Hindustan Aluminium Corporation, [1979] 3 SCC
229 and New Central Jute Mills v U.P. State Electricity Board, [1986]
Supp. sec 581.

CIVIL APPELLATE JURISDICTION: Civil Appeals Nos.
H 3510-3511 of 1982.
JIYAJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J.l 981

From the Judgment and Order dated 23.9.1982 and 18/19.10.1982 A
of the Madhya Pradesh High Court in Misc. W.P. No .. 888/81 and
Review M.C.C. No. 352 of 1982.

D. Gupta, M.C. Bhandare, O.P. Khaitan, Anil Bhatnagar,
Krishan Kumar, Dhruv Agarwal and Mrs. Kiran Choudhary for the
Appellants. B

S.N. Kacker, M.L. Jaiswal, Vivek Gambhir and S.K. Gambhir
for the Respondents.

The Judgment of the Court was delivered by

SHARMA, J. The dispute in these appeals is. in regard' to the C
additional demand of electric charges made by the respondent no. 1 on
the appellant no. 1 for energy consumed. By a writ application filed
before the Madhya Pradesh High Court the appellant challenged the
demand ofRs.1,86,97,880.97 for the period 12.11.1979 to 30.6.1981.
Except for .granting a minor relief as indicated in paragraph 45 of 'its D
judgment, the High Court dismissed the writ application. The writ
petitioner-appellants have impugned the judgment before this Court
by special leave.

2. The appellant no. 1 Jiyajeerao Cotton Mills Ltd. (hereinafter
referred to as the Company) which runs a textile mill in Gwalior, E
entered into an agreement dated 27.10.1971 with the respondent no. 1
Madhya Pradesh Electricity Board (in short the Board) a licensee
under the Indian Electricity Act, 1910 (hereinafter referred to as the
1918 Act) for supply of electricity in accordance with the terms and
conditions mentioned therein. The quantity of .electricity to be
supplied varied from time to time under supplementary agreements F
and the Board had to supply 2,500 K. W. on A.T. basis with effect from
1. 11. 1973. Since 1975 the Board is not able to generate sufficient
electricity to meet the full demand of the consumers and with a view to
ease the situation. two orders were issued by the State of Madhya
Pradesh under s. 22B of the 1910 Act on 4.4.1975 called as the Madhya
Pradesh Electricity (Supply and Consumption Regulation) Order, G
1975 and the Madhya Pradesh Electricity (Generation, Control and
Consumption) Order, 1975. The learned counsel for the parties have
in their arguments referred to these orders as Regulation Order ancj
•. " Generation Order respectively. By the Regulation Order, the consum·
ers were asked to reduce their consumption in accordance with the
provisions therein. It was further provided ihat without prejudice to H
--.;
982 SUPREME COURT REPORTS [ 198§] Supp. 2 S.C.R.

the Board's power to disconnect the supply in the event of any viola-
A
tion thereof, the consumer will have to pay the charges at penal rates
for the excess energy consumed. The Generation Order said that if a
consumer had an alternative source of generating power from his own
generating set (described as captive power by the parties) it may be
required to generate electricity to the maximum extent technically
B feasible and the supply by the Board would be reduced to that extent.
The Order in Clause 3 provided for assessment of the generating
capacity of the captive power of the consumer. The contract demand
under the agreement was directed to remain reduced accordingly. Sub-
clause (iii) of Proviso to Clause 3 said, that if in certain contingencies,
there was reduction in the generation of electricity by the consumer,
the Board would try to make good the deficit against an appropriate
c charge for it. An arbitration clause with respect to any dispute was
included in the 6th paragraph of the Order as its last term.

3. Both the Orders came into force with effect from the 7th of
April, 1975. The Divisional Engineer, Gwalior informed the appellant
D Company by the letter dated 17.5.1975 (marked as Annexure 'B', page
121, Vol. II of the paper book) that its additional generation capacity
technically feasible by its own generating sets had been assessed at
2,700 K.W. In. view of the contract under which the Board was to
supply 2,500 K.W. with effect from 1.11.1973, the Company was
directed to generate-additional electricity to that extent, thus reducing
E the demand on. the Board to nil. After several letters passed between
the parties, which will be dealt with at some length later, another letter
dated 10. 10. 1975 (marked as Annexure 'O', page 136, Vol. II of the
paper book) was sent to the Company issuing a fresh direction for
generating additional electricity to the extent of 2,500 K. W. with effect
from 31.10. 1975.
F
4. It appears that the Board did not bill the appellant Company
for any additional energy supplied at the penafrate for the next several
years. According to its case the Company invoked the provisions of
Proviso (iii) to Clause 3 of the Generation Order pleading emergency,
arising from time to time, covered by the Proviso, and was supplied
G additional energy accordingly. The Company was under a duty to
place its difficulties before the Board and obtain permission before
drawing additional energy under this provision of emergency supply. It
appears that after 11.11.1979 additional power was drawn, by the
.,. f
appellant without the Board's prior approval and a letter Annexure 'T'
dated 5.8. 1980 was ultimately sent to the Company explaining the
·H situation and telling it that the supply availed by it with effect from
-> JIYAJEERAO COTION MILLS v. ELECTRICITY llOARD [SHARMA. J .I 983

12.11.1979 would be billed at the penal rate. In the meantime 1wo
additional contracts were executed by the parties; the first one on A
11.7.1979 (Annexure 'C')"for supplying additional 800K.W., and the
second one dated 26.2.1980 (Annexure 'D' for additional 190 K.W.
Thus the total demand under the agreements added to 3,490 K.W. The
Board by its letter Annexure 'U' dated 13.10.1980 reiterated its stand
taken under Annexure 'T' intimating the appellant the maximum B
amount of electricity it was entitled to consume at the normal rate.
The letter further added that no additional power would be allowed as
emergency supply to the Company even during the period of overhaul-
ing of the generating sets as was done earlier under Proviso (iii) to
Clause 3 of the Generation Order. The matter was debated for some
time and ultimately the additional demand for the period 12.11.19'79 to
30.9.1980 amounting to Rs.94,41,745.60 was served on the appellant c
Company by the letter Annexure 'X' dated 15 .1.1981. The further bills
Were also sent on the same basis.

5. On 5 .8.1981 the application under Article 226 of_the Consti tu-
tion was filed before the Madhya Pradesh High Court challenging D
Annexures 'H', 'O', 'T' and 'U'. The main case of the petitioner-
appellant was rejected by the High Court, but marginal reliefs with
respect to the Board's demands for the period 12.11. f979 to 25.2.1980
and from 26.2.1980 to 31.7.1980 were allowed on the basis of errors in
cfilculation. The High Court also pointed out that under the terms of
the Generation Order the Board was under a duty to consider and E
allow the additional emergency supply when conditions arose making
the Proviso (iii) to Clause 3 applicable and the Board could not refuse
to do so as was observed in some of its letters. Subject to these minor
modifications the writ application was dismissed by the judgment
dated 23.9.1982. The Company thereafter filed an application for
review, which was dismissed by a speaking order of 19.10.1982. The F
present appeals have been filed by special leave against these two
judgments.

6. The appeals have been argued at considerable length by Mr
Dipankar Gupta on behalf of the appellant and Mr. S.N. Kacker
represeming ihe respondents with great ingenuity and resourceful- G
ness. Mr. Gupta appearing in support of the appeals, however, did
not press some of the points urged on behalf of the appellant in the

' . High Court and relied upon some new grounds. We, therefore, do not
consider it necessary to deal with all the points disposed of in the High
Court judgments except making reference to some of them while deal-
ing with the points urged before us. H
984 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

7. It will be necessary to examine the relevant portions of the
A Regulation and Generation Orders (Annexures 'E' and 'G') before
considering the arguments of the learned counsel. They were both
issued on 4.4.1975 by the State Government of Madhya Pradesh under
s. 22B of the 1910 Act, which reads as follows:

B "22. B(l) If the State Government is of opinion that
it is necessary or expedient so to do, for maintaining the
supply and securing the equitable distribution of energy, it
may by order provide for regulating the supply, distribu-
tion, consumption or use thereof.

(2) Without prejudice to the generality of the powers
c conferred by sub-section ( 1) an order made thereunder
may direct the licensee not to comply, except with the
permission of the State Government with-

\i) The provisions of any contract, agreement or
L requisition whether made before or af:er the comm-
encement of the Indian Electricity (Amendment)
Act, 1959, for the supply (other than the resumption
of supply) or an increase in the supply of energy to
any person, or

E (ii) any requisition for the resumption of supply of
energy to a consumer after a period of six months,
from the date of its discontinuance, or

(iii) any requisition for the resumption of supply of
energy made within six months of its continuance,
p where the requisitioning consumer was not himself
the consumer of the supply at the time of its a1s-
continuance."

Clauses 3 and 4(i) of the Regulation Order (Annexure 'E') have been
referred to by the learned counsel for the parties repeatedly and they,
G are quoted below:

"3.(1). No consumer receiving supply of electrical energy
from the Board and consuming or using electrical energy
for any of the categories specified in column (2) of PA RT-
A of Schedule VII shall consume or use during any month
H or day electrical energy in excess of that specified in respec-
~ JIYAJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J.l 985

tive entry in column (3) of the said Schedule;
A
(2) (a). If at any time during the month, on inspection of
the meter reader or any other person authorised by the
Divisional EngineerJAssistant Engineer of the Board
having jurisdiction, the cunsumer is found to have already
-reached or exceeded the quantity of electricity indicated in B
column (3) of Part-A of Schedule VII the Divisional
Engineer/Assistant Engineer of the Board, having juris-
diction over the area where the consumer's premises is
situated, may by an order in writing require the consumer
not to utilise electrical energy for the rest of the month and
such order shall be complied with by the consumer forth-
with. Appeal shall, however, lie with the Deputy Chief
c
Engineer of the Board having jurisdiction whose decisions
thereon shall be final.

(b) Any H .T. consumer who makes default in com-
plying with the directions contained in sub-clause (1) and D
item (a) of this sub~clause shall be warned in the first
instance in writing by the Divisional Engineer/Assistant
Engineer of the Board having jurisdiction over the area
where the <:onsumer's premises is situated and if the
default continues, the said Divisional Engineer/Assistant
Engineer shall after reasonably satisfying himself discon- E
nect power supply altogether to such consumer and supply
shall not be resumed without orders of the Deputy Chief
Engineer of the Board having jurisdiction."

"4. Without prejudice to the Board's powers to disconnect
supply in the event of violation of Clause 3 above, the F
Board shall bill the electricity consumed or used in excess
of the monthly limit specified in column (3) of the Schedule
VII at the penal rates as mentioned below:

{i) All H.T. consumers as specified in Schedules I,
II, III and IV-Four times of normal tariff (both in G
!"Spec! of demand charges and energy charges) includ-
ing fuel cost adjustment charges."
•.
The e'xpressions "average monthly consumption"., "average demand"
• and "average daily consumption" have been defined in Clause 2 of
Annexure 'E' by taking January, February and March 1975 as the base H
986 SUPREME COURT REPORTS [ 1988] Supp. 2 S.C.R.

A period. The VIIth Schedule mentioned in Clause 3 above has not been
included in the paper books with reference to which arguments have
been addressed but a copy thereof was filed during the hearing and
accepted as a correct copy by the both sides.

8. This Regulation Order was substituted by another Order and
B later by still a third Order, amending the penal rate and the Schedules
to the Order. However, the learned counsel for the parties stated that
except for change in the penal rate and the figures in the Schedules,
the Order has remained the same all thro11g!i, and it is not necessary,
therefore, to refer to the other Orders.

9. So far as the Generation Order is concerned, it requires such
c consumers, who have their private generating sets, to generate electri-
city to the maximum extent technically feasible in the following terms:

"3. Any consumer who is receiving electrical energy from
the Board and also has an alternative source of generation
D of power by his own generation set may be required by the
respective Divisional Engineer of the Board having juris-
diction to generate electricity from his set (or sets) to the
maximum extent technically feasible in the opinion of the
Divisional Engineer and the Board's supply of electrical
energy to such consumer shall be reduced to the extent of
E additional generation assessed as feasible by the Divisional
Engineer;

Provided that-

(i) Before assessing the additional generation feasi-
F ble and directing the consumer accordingly, the Divi-
sional Engineer shall consult the local Manager or
Engineer in charge of the set;

(ii) The Board shall, during the period such a direc-
tion is in force, reduce the contract demand of the
G consumer to a corresponding extent and

(iii) if due to an emergency outage, whichjn the opi-
nion pf the Divisional Engineer of the Board having
jurisdiction is not due to any negligence or failure of
those responsible for maintaining and running the
H set, there is reduction is additional generation, or if in
JIYAJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J.] 987

the opinion of the Divisional Engineer, the set has to
A
be taken out for maintenance during the period of
such emergency or maintenance outage the Board
\ shall try its best to make good the reduction to the
consumer, levying an appropriate charge for it."

Its 6th Clause directed any dispute between the consumer and the B
Officer acting under Clauses 3 and 4 to be referred to the Electrical
Adviser arid Chief Electrical Inspector to the State Government, for
his decision.

10. While Regulatioli Order was meant for general application
to all consumers, the Generation Order was confined only to such
consumers who were having captive power source. It is also manifest c
that such a consumer was under a duty to generate additional electri-
city orily when the maximum technically feasible capacity of the
generating set or sets of the consumer was assessed under Proviso (i)
to Clause 3 and was followed by a direction to that effect. The main
argument of the learned counsel for the appellant has been that none D
of the two assessments and directions contained in Annexures 'H' and
'O' was sustainable in law on the grounds that-

(a) in making the assessment of the technically feasible
maximum capacity, relevant factors were not considered, and
irrelevant and extraneQus matters were taken into account; E

(b) the requisite opinion was not arrived at and the assessment
was not made by the authority empowered to do so; and

(c) the participation of the appellate authority in process of
assessment, corr.pletely vitiated. it in law. F

Mr. Gupta argued that instead of examining the point on its merit, the
High Court erroneously brushed it aside on the plea of waiver and
acquiescence. Relying on a number of letters sent by the appellant to
the respondent Board it was urged that the appellant Company was
protesting against the impugned directions issued by the Board and it G
is not right to shut it out on the technical ground of estoppel. Mr.
Kacker, on the other hand interpreted the High Court's judgment
differently. According to him, none of the points raised by the
Company was rejected without examining the merits. He strongly
relied of! some of the letters referred to in the argument of the
Company itself as also a few other letters in support of his submission · H
988 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A that they furnished unimpeachable evidence including admissions on
the part of the appellant Company proving that the assessment of the
maximum feasible capacity of the appellant's captive power sets was
duly made in accordance with the Generation Order and in pursuance
thereof the required direction was issued which was acted upon by the
parties for a number of years. The Company not only took steps to
B generate f!ie additional energy as was required of it, it also took
advantage of the provisions of Proviso (iii) to Clause 3 of the Genera-
tion Order and benefitted by it from time to time.

11. For appreciating the argument of the learned counsel for the
appellant it is necessary to examine some of the Orders and letters
C issued in March and April 1975. As has been mentioned earlier, the
two Government Orders were issued on 4.4.1975. It appears that the
matter was being discussed by the different authorities of the State
Government and the Electricity Board since before this date and
advisability to require the consumers having captive power to generate
as much energy as was technically feasible was under consideration for
D some time. The question as to their capacity in this regard, naturally
assumed importance and some steps for assessing the same were taken
a few days before the Orders actually came into effect. On 28.3.1975 a
letter sent from the Board to Sri H.K. Aggarwal, the Electrical
Adviser and Chief Electrical Inspector to the State Government
(Annexure 'R-1') referred to a telephonic talk in connection with the
E assessment of the generating capacity of the captive power set. It was
mentioned "that it would be necessary to make a realistic assessment
in respect of each of the consumers" by keeping in mind the suggested
factors. The letter further said that with that object the Board had
constituted a Committee consisting of Sri Aggarwal himself, the
Superintending Engineer of the concerned Circle of the Board and the
F Divisional Engineer (Generation), Jabalpur of the Board as Members.
The appellant Company is mentioned as one of the 17 consumers in
this category. Along with his letter dated the 3rd of May 1975 Sri
Aggarwal sent the report as desired. It has been contended on behalf
of the appellant that the Generation Order authorised the Divisional
Engineer of the Board to assess the additional feasible capacity of the
G captive power source and any other person or authority or Committee
could not usurp this jurisdiction. The impugned letter Annexure 'H'
issued by the Divisional Engineer has been characterised as illegal on
the ground that it was based upon the assessment by the Committee
headed by Sri H.K. Aggarwal and not by the Divisional Engineer. The
learned counsel proceeded to say that immediately after receipt of the
H intimation by the Board, the Company protested on 21.5.1975. The
J!Y AJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J. J 989

Board's reply dated 2.6.1975 has been relied upon as showing that the
A
direction was issued on the basis of the assessment of the Committee
and not ·of the Divisional Engipeer. It was also pointed out that
_Electrical Adviser and Chief Electrical Inspector to the State
Government (the then incumbent being Sri H.K. Aggarwal) was the
appellate authority under Clause 6 of the Generation Order and could
not, therefore, take part in the original assessment proceeding. The R
reply of the Board is that the Committee no doubt inspected the
generating sets and discussed the matter with the consumers, and thus
collected relevant data for the purpose of assessment of the capacity,
but the Divisional Engineer while relying on the material collected,
did not mechanically accept the conclusion of the Committee. He (the
Divisional Engineer) applied his mind before issuing the Order C
Annexure 'H'. Mr. Kacker further said that the matter did not rest
there. After taking into account the objection raised by the Company
the Divisional Engineer took up the matter afresh and applied his
mind independently. Ultimately he came to a similar conclusion as is
evident by the second direction as contained in Annexure 'O' dated
10.10.1975. The argument of Mr. Kacker appears to be well founded. D

12. On receipt of the letter Annexure 'H' dated 17.5.1975
whereby the Divisional Engineer directed the Company io generate
2,500 K.W. of electricity by its own generating sets, the appellant
Company protested by its letter dated 21.5.1975 (at page 195 of the
Paper Book Vol. II). Mr. Gupta strenuously relied on this letter which E
stated that the Company failed to understand as to how its additional
generating capacity had been assessed at 2,700 K.W. It will be neces-
sary to discuss this letter in some detail later in the judgment while
dealing with another point as Mr. Kacker also has relied on certain
statements made therein. At this stage, however, we should like to
point out that the appellant did not challenge the assessment on the F
ground that it was not made by the authority mentioned in ihe Genera-
tion Order; and in the last paragraph the request made was for
"review". The next document referred to by the learned counsel for
the appellant is the letter dated 30.5.1975 (page 305 of the Paper Book
Vol. II), wherein the Company stated _that:
G
"as desired by the Board, we have started generating about
2,000 K.W. additional power at our generating station ....
our Coal consumption has, therefore, increased by 70
tonnes daily for this additional generation."

Finally a request was made in the letter to the Superintending H
990 SUPREME COURT REPORTS

A Engineer of the Board to recommend the appellant's case for allot-
ment of additional wagons for transport of coal. Instead of advancing
the appellant's case, the letter shows that the assessment and the direc-
tion mentioned in Annexure 'H' were accepted by the Company and
steps were teken to implement the same. Chronologically proceeding,
the letter dated 2.6.1975 (Annexure 'I' at page 122 of the Paper Book
B Vol. II) was relied on by Mr. Gupta as proving the fact that the
assessment of additional generating capacity had been done by the
Committee mentioned in the letter dated 28.3.1975 (supra) and not by
the Divisional Engineer as required by the Generation Order. The
learned counsel for the parties next placed before us the letters dated
3.6.1975 (document no. 3 at page 302 of the Paper Book Vol. II) and
dated 4.6.1975 (document no. 1, at page 300 of the Paper Book Vol.
c II), another letter of the same date (Annexure 'J' at page 123 of the
Paper Book Vol. II) and then dated 8.8.1975 (Annexure 'K' at p:ige
132 of the Paper Book Vol. II) and 10.10.1975 (Annexure 'O' at page
136 of the Paper Book Vol. II).

D 13. The argument of Mr. Kacker has been that the Divisional
Engineer applied his mind independently to the question of assess-
ment of the capacity of the appellant's generating sets, and while
so doing took in consideration the factual data collected by the
Committee mentioned in the letter of 28.3.1975. It was pointed out
that all the three persons constituting the Committee were very highly
E placed officers and there could not be any legitimate objection if the
Divisional Engineer referred to the data collected by them in presence
of the Company's Officers after personally verifying them. Evel) a
judicial tribunal or a regular court is allowed to rely upon evidence
collected by an enquiry officer or commissioner. The learned counsel
heavily relied on the letter dated 3.6.1975 from the Divisional
F Engineer to the Superintending Engineer (document no. 3). On behalf
of the appellant it was said that the Company had no knowledge of this
letter in 1975. We do not think that this is a correct stand. The letter
mentions an inspection of the Company's Power House by the Divi-
sional Engineer and the materials supplied by the Company to him.
The details with respect to the boilers of the Company and the other
G figures mentioned therein, correctness whereof is not challenged by
the appellant, fully establish that the inspection was made in presence
of and the figures were collected with the assistance of the officers of
the appellant Company and the conclusion regarding the assessment
was reached after taking into account the case of the Company. It has
been argued on behalf of the Board before us ihat the method adopted
H by the Divisfonal Engineer as disclosed by this lettter (document
/
JIYAJEERAO COTTON MILLS v. EI.ECTRICITY BOARD [SHARMA, J .] 991

No. 3) was different from that followed by the Committee, as a result
of which there was some difference in their final result. On the basis of A
his independent assessment the Divisional Engineer issued another
instruction as contained in Annexure 'O' dated 10.10.1975 (at page
136 of the Paper Book Vol. II), mentioned earlier. This second direc-
tion which was effective from 31.10.1975 naturally superseded .the
earlier one under· Annexure 'H'. The Board's impugned demand does · B
not relate to any period before 31.10.1975 and, therefore, it is immate-
rial if the direction in Annexure 'H' is completely ignored on account
of its supersession by Annexure 'O' or on any other ground and it be
assumed that in absence of a feasible assessment of the capacity, the
Generation Order was nor applicable to the appellant Company before
31.10.1975.
c
14. Mr. Gupta relied on the letter dated 4.6.1975 (document
No. 1), referred to above, for showing that the Company emphatically
protested against the assumption that it could generate additional 2500
K.W. It was said that its capability ir, this regard was limited to 1200
K.W. The learned counsel referred to the other letters also for a o
similar purpose. We think that in view of the revised order of the
Divisional Engineer passed on 10.10.1975, vide Annexure 'O', earlier
correspondence is not matedal for the purpose for which the appellant
is trying to use them. The learned counsel for the respondent has
relied on some of them for his argument on the other poinis and we
will have to deal with them again when we take up those points. So far £
as the question as to whether an assessment of the feasible capacity of
the generating sets of the appellant Company was made by the Divi-
sional Engineer as required by the Generation Order is concerned, we
.have no hesitation in deciding the issue in favour of the respondent.

15. On behalf of the appellant it was urged that since the Electri- f'
• cal Adviser-cum-Chief Electrical Inspector of the State Government
_who has been mentioned as the appellate authority under Clause 6 of
the Generation Order was associated with the assessment by acting as
a member of the Committee (vi de Annexure 'R-1' at page 256 of the
Paper Book Vol. II), the entire process in this regard should be held to
be completely vitiated. In view of our finding in the preceding G
paragraph, the argument has to be rejected. Besides, it is not correct
to assume that an appeal against the assessment was provided by
Clause 6 of the Generation Order which reads as follows:

"6. ln case of any dispute between the consumer and the
Divisional Engineer acting under Clauses 3, .and 4, it ;shall H
992 SUPREME COURT REPORTS [ 1988) Supp. 2 S.C.R.

be referred to the Electrical Adviser and Chief Electrical
A Inspector to the Government of Madhya Pradesh whose
decision sball be final."

The above is obviously an arbitration clause in case of a dispute and
since the maintainability of the appellant's writ application before the
B High Court was decided·in)ts favour, it cannot make a grievance on
this score. Besides, if the appellant Company had a grievance against
the assessments which were made in 1975, it ought to have challenged
the same then and not to have waited for a number of years before
approaching the High Court.

16. Mr. Gupta challenged the assessment still on another
c ground. He contended that while making the assessment, the relevant
factors were ignored, and irrelevant and extraneous considerations
were taken into account. The argument which is based on certain
scientific technical hypothesis proceeded thus: The Company had 3
Generator Sets described as M.V. Turbo Generator Set, B.B. Turbo
0 Generator Set and AEG Turbo Generator Set; and five Boilers.
Another Boner was added in 1977. Every generator set has a rated
capacity which has been described by the learned counsel as the level' at
which operation can continue satisfactorily for indefinite period. Th,is
rated capacity is declared by the manufacturer and can be accurately
ascertained without difficulty. The terms 'overload' and 'overload
E capacity' have been explained by the learned counsel as "one exceed-
ing the level •at which operation can continue satisfactorily for an
indefinite period" and "excess capacity of a generator over that of its
rating", respectively. It was urgued that overloading may lead to dis-
tortion or to overheating with risk of damage, depending on the type
of circuit or device, and so in many cases only temporary overloads are
F permissible. The overload capacity, it has been said, is referrable
generally for a specified time. The criticism against the report of the
Committee is that the Committee took into account the overload
capacity of the sets and not the rated capacity. Mr. Gupta stressed on
the point that the AEG Turbo Generator Set was maintained as a
standby to be operated only when other sets were not available for any
G reasons. He also said that the feasible generation capacity of a set is
also dependent on other factors and conditions, namely, age and
condition of the set, availability of coal of requisite quality and speci-
fication, adequate and continuous supply of water etcetera. Referring
to the report of the Divisional Engineer dated 3.6.1975 (document
No. 3 at page 302 of the Paper Book Vol. II) it was argued that the
H Divisional E11_gineer picked out a moment of time when the plants
-..
I JIYAJEERAO COTTON MILLS v. ELECTRICITY BOARD [SHARMA,J.] 993

reached the generation of 7500 K.W. and concluded therefrom that
the appellant was capable of generating 1800 extra K.W. from its A
captive plant. It was further suggested that in any view of the matter
on the basis of the aforesaid opinion of the Divisional Engineer the
appellant Company ought to have been asked to generate only 1800
K.W. more and not 2500 K.W. Finally it was argued that the Board
has to be confined to the reasons in support of the assessment orders B
which are mentioned therein and cannot be allowed to travel beyond
the same.

17. Mr. Kacker took great pains in going into the reports and
specially through the aforementioned report of the Divisional
Engineer dated 3.6.1975, with a view to meet the criticism of the
appellant and support the report as a correct one on merits. He also C
relied on a number of letters sent by the appellant showing that the
assessment was accepted as binding on it and claiming from time to
time benefits under Proviso (iii) to Clause 3 of the Generation Order
which was allowed for a number of years. The learned counsel relied
on this aspect as furnishing strong circumstantial evidence in support D
of the correctness and binding nature of the assessment impugned
belatedly when the appellant approached the High Court.

18. It is significant to note that at no point of time either in 1975
t or later the appellant chose to get a scientific assessment of its generat-
I ing sets made by all" expert, nor even after filing the present writ E
petition in the High Court did it file any opinion of a person having
scientific expert knowledge showing the impugned assessments to be
erroneous or undependable. It is also important to appreciate that the
appellant has not either earlier or now made any complaint of ma/a
fides or bias against any of the members of the Committee or the Divi-
sional Engineer or for tha·t mattter against any officer of the respon- F
,. dent Board or the State. On the other hand, the Officers of the Board
appear to have taken a very sympathetic attitude towards the appellant
for more than four years and allowed it the benefit of additional
energy under Proviso (iii) to Clause 3 of the Generation Order very
generously. It was only when the Board discovered in 1980 that the
appellant had stopped even informing the Board and obtaining its G
prior approval as envisaged by the Generation Order before consum-
ing extra energy that the matter was closely examined by the Board's
Officers. Mr. Kacker is also right in relying upon the conduct of the
parties for about four or five years after the assessment was made as
furnishing importa,nt circumstance relevant to the issue. We may,
therefore, examine a number of letters in this regard some of which H
have already been mentioned earlier.
994 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

19. The very first letter of the appellant Company after receiving
the impugned direction in Annexure 'H' dated 17 .5 .1975 was sent
within 4 days on 21.5.1975 and is included at page 195 of Vol. II of the
paper book. It will be seen that the protest against the assessment
·referred to by the learned counsel for the appellant was not founded
on any of the grounds pressed now. The basis was "only due to steam
B limitation", assuring that "once our boiler under erection starts steam-
ing, we can enhance our generation to the full installed capacity." The
prayer in the end of the letter was to "review the whole matter". The
Divisional Engineer, as mentioned earlier, personally examined the
entire matter be novo. Although in its letter dated the 21st May 1975
the Company had stated that it was not advisable to generate more
than 12 K.W. from its own sets, by the next letter dated 30.5.1975
(page 305, Vol. II) the appellant informed the Board that they were
generating about 2000 additional K. W., but were in the need of addi-
tional coal, for which the Board was requested to make a recommen-
dation. In Annexure 'J' dated 4.6.1975 (page 123 Vol. II) the protest
against the assessment was once more reiterated on account of some
D trouble with the boilers. The first paragraph of this letter indicates that
the question was under discussion of the Divisional Engineer with the
Company's representatives who was armed during the conference
"with all relevant records". In this background the fresh independent
assessment was made by the Divisional Engineer as per the document
No. 3 dated 3.6.1975 (page 302, Vol. II). Before the fresh independent
E direction by the Divisional Engineer as contained in the impugned
Annexure 'O' dated 10.10.1975 was issued, a suggestion was made on •
behalf of the Board to the appellant Company for its satisfaction as to
the correctness of the assessment by "actually taking the load on the
set, after running it in parellel with the Board's supply system". The
learned counsel for the parties before us explained the scientific impli-
H cations of the test by "parellel running", but we do not consider it
necessary to go in its technical details. The Board requested the Com-
pany's consent for such a test, to be communicated positively within a
week. By its reply dated 25.8.1975 Annexure 'L' (page 133, Vol. II)
the Company rejected the suggestion on two grounds, namely, that it
was "not having protection system like power relay etc." and "in case
<1 of tripping of Board's supply we would be doing the parellelling of the
sets"; which was not safe. In reply thereto the Board satisfactorily met
the objections by its next letter Annexure 'M' dated 25.10.1975 (page
134, Vol. II). It was pointed out that the parellel running test will be
undertaken only for a short period after which the captive sets would
be separated from the Board's system; and a disturbance free period
H could be chosen for the same. Besides. the objections to the suggested
JIYAJEERAO COITONMILLS v. ELECTRICITY BOARD [SHARMA, J.] 995

test have to be rejected as frivolous in view of the stand of the Com-
A
pany itself as indicated in the letter Annexure 'N' (page 135, Vol. II)
dated 6.11.1975, stating that it had no objection into the suggested
trial, which the appellant claims to have sent to the Board which fact is
however denied. In the meantime the second assessment order under
Annexure 'O' had already been communicated. It was, therefore,
open to the appellant either to accept and act upon this fresh assess-
ment or to go in for a further check as mentioned by the Board. The
appellant did not pursue the matter at all and observed silence on the
suggestion for the parellel running test. Mr. Gupta, however, con-
tended that the offer in the letter dated 25.10.1975 was accepted by the
appellant in its Jetter dated 6.11.1975, Annexure 'N' mentioned above.
Mr. Kacker asked the Court to disbelieve the Company's assertion of
having sent this letter and pointed out that a perusal of all the letters
c
sent from the Company to the Board would show that none of them
was ever sent to the Joint Secretary (V) except Annexure 'N'. The
production Manager of the appellant Company under whose signature
the Jetter is claimed to have been sent also does not appear to have
been taking any interest either earlier or later than this letter. Mr. D
Kacker alternatively contended that assuming that such a letter was
actually sent by the Company to .the appropriate authority of the
Board, it does not stand to reason as to why the Company did not send
any reminder, and remained satisfied for more than four years, asking
for benefits from the Board on the basis of the assessment in Annexure
'O' having. been appropriately made. The argument of Mr. Kacker E
appears to be well founded. It is significant to note that the appellant
had not accepted the offer as wrongly claimed by it, on the basis of the
Jetter Annexure 'N', but at' the same· time the said letter does indicate
that tJle suggested parellel running test was feasible and there was no
justification to reject it on the flimsy grounds mentioned by the appel-
lant on 25.8.1975 (Annexure 'L'). The conclusion is irresistible that F
the appellant Company-Oacked out without adequate reason from the
realistic test proposed by the Board to check the correctness of the
assessment.

20. Before proceeding to examine the other letters, strongly
relied upon on behalf of the respondent Board, it may be useful to G
recall that the Company had mentioned the inadequate capacity of the ·
boi!er5 in. steam geilera\ion as the ground for not being able to gen-
erate additional electricity as required by the impugned directions. It
was also mentioned that after a sixth boiler became available, the
difficulty would stand resolved. In this background Mr. Kacker placed
before us several letters starting with the letter of the Company dated H
996 SUPREME 'COURT REPORTS [1988] Supp. 2 S.C.R.

14.2.1977 (at pages 4 to 8\of additional paper book prepared and filed
by the respondent Board, which was referred to by the learned counsel
as Vol. IV of the Paper Book). The Company, by this letter requested
the Board to charge at the normal tariff for the additional electricity
consumed by the Company as emergency supply as per Proviso (iii) to
Clause 3 of the Generation Order. The statements made in the letter
B appear to be extremely important for the purpose of the Board's case
and it may be useful to consider them in some detail.

21. In the first paragraph the Company stated ·that it was again
placing for the Board's consideration, the reasons why it could not
generate the additional power according to the direction issued. In the
second paragraph the main difficulty has been mentioned as steam
limitation and reason therefor has been. stated in the third paragraph
as the inferior quality of coal. Later it was stated thus;

"These problems would not have arisen in case our Sixth
Boiler recently erected was commissioned and running
D without any trouble."

It was said that although the sixth boiler was taken in August, it did
not work properly for some time. Proceeding further the letter stated:

"It is only since the beginning of January the Sixth Boiler
has been in continuous service, as a result of which we were
in a position to repair our other Boilers also.

Since the last week of January, we are generating our
full requirement .and not even availing the 600 K.W.
allowed by the Board."
F
In the penultimate paragraph of the letter, the case for normal tariff on
the additional electricity already supplied by the Board was argued in
the fqllowing manners:

"Considering all the above facts, we sincerely hope, that as
due to no fault of our own we had to take power from M.P.
E.B., more than allotted to us, it is requested that the
charges made to us may be on the usual terms as previously
granted by the Board for which we will be ever grateful."
(emphasis added)

H The letter is not only conspicuous by the absence of the objections
J!Y AJEERAO COITON MILLS v. ELECTRICITY BOARD [SHARMA, J. I 997

which were taken later in 1980 before filing of this writ case, but it
positively indicates that the Company accepted the assessment as cor- A
rect, and as expected, it was actually able to generate the required
additional electricity after the addition of the sixth boiler and was
pleading for normal tariff for the additional electricity already con-
sumed earlier. This position is re-inforced by several further letters of
the Company, but before we go to them we would like to point out B
another very important fact emerging out of this very letter. At page 7
of Vol. II of the paper book the letter dealt with another aspect highly
relevant to the present dispute. Another Limited Company known by
the name of "Gwalior Rayons" is having a factory near thy appellant
Company's factory and the appellant was supplying electric energy to
the other factory illegally and without the permission of the Board. On
an objection by the Board this matter was dealt with in the following c
words:

"It is not out of place to mention in this appeal that we had
given now and then some power in the past to the Gwalior
Rayons, in emergency for their Beam Dyeing Plant D
whenever M.P.E.B. power failed. This was due to the fact
as the Heam dyeing plant is a pressure dyeing plant, with a
continuous process, there used to be heavy damage to very
costly Beams. Since this issue was raised by your Divisional
Engineer, we have completely stopped this type of supply
to them, though the same was given to them after reducing E
our humidity or waste plant load.

It is again our request here that the same may be
allowed in emergency under whatever arragement the
Board may so decide to avoid costly damage to the cloth."
F
A fervent appeal in the interest of the other factory belonging to a
different Limited Company altogether was made in the above terms. It
has to be remembered that in view of the provisions of s. 28(1) of the
1910·Act, the Company was prohibited from supplying any energy to
the-other factory. This aspect was stressed in term 2(b) of the agree-
ment between the appellant and the Board as per Annexure 'A' (page G
62 of Vol. II). It was not the appellant's case then or before us now
that it had obtained the previous sanction of the State Government for
so doing. Under Cluase 4 of the Generation Order, which reads as
follows, jurisdiction was vested in the Divisional Engineer of the
/
Board to direct a consumer having captive source of power to supply
electricity to the Board or to any other consumer only if the consumer H
was having surplus generation:
998 SUPREME COURT REPORTS I1988] Supp. 2 S;C.R.
"4. If the consumer having own generating set(s) can have,
A
as a result of additional generation reasonable in the
opinion of the Divisional Engineer of the Board having
jurisdiction, energy, surplus to his requirement, the
Divisional Engineer may direct him to supply the surplus to
the Board or to another consumer nearby who has been
B taking supply from the Board and who is willing to take the
supply from the consumer having generating sets:

Provided that

(i) the contract demand of and the supply to the other
consumer from the Board shall be reduced correspon-
c dingly, whether or not the other consumer avails of the
supply from the consumer having the set,

(ii) the other consumer shall pay to the consumer having
generating set(s) for such supply as if it is supplied from the
D Board,

(iii) if the payment receivable by the consumer having the
set under the last preceding clause is less than his incremen-
tal cost of additional generation, the Board shall make
good the difference to the consumer having the set(s) and
E
(iv) the consumer having the set(s) will not be required to
incur any additional expenditure for laying lines for trans-
mitting energy to the other consumer; such lines if required
being laid by and at the cost of the Board."

F How could, in these circumstances, the appellant pass on to a third
party some of the electricity meant for it, there is no explanation on
the records. Mr. Gupta the learned counsel for the appellant argued
that since the other factory was in the neighbourhood it was in the
interest of the appellant Company for the sake of security to see that
ot!Jer factory was not plunged in darkness when the supply was inter-
C nipted on account of tripping. Mr. Kacker rightly pointed out that no
such suggestion was evq made on behalf of the appellant in any of its
letters. On the other hand, the reason pleaded in the letter quoted
above was to save the other Company from incurring loss due to costly
damage to the cloth. In his final reply Mr. Gupta said that the appel- \
!ant was passing on some electricity to the Gwalior Rayons only after
H reducing its humidity or waste plant load as stated in the letter. The
J 1Y AJ EE RAO COTTON MILLS v. ELECTRICITY BOARD [SHARMA, J.] 999

explanation is too vague and it cannot be assumed that the appellant A
was making the contribution to its sister concern by creating artificial
shortage of supply to its mills. The appellant's conduct cannot be
explained except on the premise that it was able to generate adequate
additional electricity for its purpose and was taking for granted the
sympathetic attitude of the Officers of the Board in liberally allowing it
additional emergency supply at normal tariff. B

22. Another letter which calls for a detailed consideration was
sent by the apellant on 30.5.1979 and is included at pages 16 to 20 of
Vol. IV. A fresh request for emergency supply under Proviso (iii) to
Clause 3 of the Generation Order was made in this letter on the
ground that the sixth boiler was out for annual overhaul. It was stated
in the opening sentence that this boiler was giving some trouble earlier
c
but later 'stabilised'. The Company was, therefore, self-sufficient
"without drawing any power from the Board so far". The letter
proceeded to state that the sixth boiler would be going for annual
overhaul and after that the annual overhauling of the other boilers
would be carried out; and therefore, 1875 K.W. should be allowed to D
be drawn for the period mentioned therein. Assurance about the
future was held in the following terms:

·'Now when our Sixth Boiler has been stabilised we would
normally not draw any power from the ~Board after
15.9. 1977 when overhauling of all the boilers is complete E
except in case of emergency due to outage of any of the
boilers.··

It was further requested thar during the period of breakdown
emergency power as detailed should be supplied and,
F
"we would request you that for the power availed by us
from the Board for above purpose, say up to a total of 7
days in a month, we may be charged at the same tariff".

Insisting again that it should be allowed to supply electricity to
Gwalior Rayons, described as its sister concern, the letter read as G
follows:

"Here we may also mention that we have been
supplying power to our sister concern Mis Gwalior Rayons,
in accordance with the provisions of sanction granted to
us under Section 28 of the I.E. Act vide Govt. Order H
1000 SUPREME COURT REPORTS [1988) Supp. 2 S.C.R.

No. 1313/6061/XIIl/74 dated 8.4.1975. However. it had not
A
been possible for us to obtain prior permission from S.E.
Gwalior before switching over power to Gwalior Rayons. It
may be mentioned here that power has to be supplied to
Mis Gwalior Rayons during the period the Board's supply
remained off, and it is not practically possible to obtain
B prior permission for supply in such cases. We would, there-
fore, request you that prior permission should be given
once for all for supplying power to the Gwalior Rayons
during the period supply from the Board to Mis Gwalior
Rayons remained off.··

This letter dated 30.5.1977 confirms the conclusions derived from the
c earlier letter dated 14.2.1977 and clarifies that the first letter was not
sent by some mistake on the part of the appellant Company. Request
for emergency supply was, however, made from time to time in 1978
and for some time in 1979, which was allowed by the Board. The other
letters including those dated 30.5.1978, 29.6.1978, 7.7.1978 and
D 9. 9. 1978 are all consistent with a correctly made binding assessment of
the feasible additional capacity from the generating sets belonging to
the Company.

23. Mr. Gupta contended that throughout the period 1975 to
1979 there was never a demand made by the Board for any energy
E consumed by the appellant at the penal rate and it was only in 1980
that the Board suddenly decided to press for the additional demand on
the basis of the Generation Order. The learned counsel emphasised
that before the provisions of the Generation Order can be relied upon
by the Board it is essential fer it to make an assessment of the consu-
mer's capacity to generate electricity from its captive power plant. The
F fact that no demand was made for many years leads to the conclusion
that such an assessment as required by the provisions of the Generation
Order to be made, had not in fact been made, and alternatively assum-
ing that factually the capacity had been assessed, the same must be
ignored on account of the conduct of the parties for several years. The
stand of Mr. Kacker, as has been stated earlier, is that the parties.
G acted on the basis that an assessment had been made in accordance
with the Generation Order and on that basis the appellant demanded
the benefit under Proviso (iii) to Clause (3) of the Order. The docu-
ments relied on by him and discussed in the preceding paragraphs
support the respondents' stand. They also explain as to why demand
on the penal rate was not made earlier, but it would be helpful to \
Hi consider a few more facts relevant to this aspect.
JIYAJEERAO COTTON MILLS v. ELECTRICITY BOARD [SHARMA . .I.] 1001

24. The system of supply of power to the consumers is such that
A
they can go on drawing electricity beyond their entitlement without
any further positive step by the officers'of the Board. The Board is,
however, in a position to, by keeping a certain swi.tch known as Air
Break Switch open, put a restriction on the consumer fro\11 drawing
excess energy. A letter dated 4.6.1975 (document no. 1, at page 300 of
Vol. II) sent by the appellant has been strongly relied on by Mr. B
Kacker for showing that Air Break Switch was permitted to remain
·closed with a view to assure uninterrupted supply to the appellant at its
request. The result was that the appellant was in a position to draw
excess electricity without reference to the officers of the Board. That
letter indicates that the Board was contemplating to keep the switch
open and the Company by this letter made a request not to do so. The
appellant Company was fully conscious of the fact that it was consum- c
ing electricity beyond its entitlement under the two Orders, by claim-
ing the benefit of the provisions dealing with emergency supply, and
was also alive to the fact that this hag to be done only with the prior
approval of the Board. The relevaq.t portion of the letter is in the
following terms: D

"Further at no time it m~y kindly be noted that power has
been availed from MPJ;rn without prior intimation by
phone either to Divisional Engineer or Supdt. Engineer.
By keeping the A.B. Switch open at your end, the delay in
supply to J.C. Mills will :be considerable which will cause E
very heavy losse~ to the fc. Mills for no fault of their own.
This may kindly be revie~ed and .... ".

The learned counsel for the Board was right in saying that on account
of this request by the appellant the line was kept open for it unhin-
dered. This did not mean that the Company was entitled to misuse the F
, privilege, draw extra energy without prior permission and thereafter
refuse to pay higher charges when demanded. It has been conclusively
established by a large number of letters on the records of the case that
for several years the Company was particular in obtaining the permis-
sion of the Board for drawing electricity in excess of what it was
entitled to, by the agreement as modified by the Regulation Order and G
Generation Order, but later, it not only stopped seeking the advance
sanction in this regard, it di<;! not even care to inform the Board of the
excess drawal. The Branch of the respondent Board at Gwalior sent
• .} the bills on the basis of the normal tariff, as the question of grant of
additional emergency supply was being dealt with by the Head Office
at Jabalpur. The Gwalior Office. was not at all dealing with the matter H
l002 SUPREME COURT REPORTS 11988] Supp. 2 S.C.R

A relating to the excess emergency supply which aspect was being exclu-
sively dealt with at Jabalpur, and as soon as the relevant facts came to
the knowledge of the Head Office of the Board it took up the matter
with the appellant Company. The entire conduct of the parties furni-
shes strong circumstantial evidence m support of the Board's case.

B 25. Another argument addressed by Mr. Gupta is based on the
letters Annex. 'P' series sent by the Board to the .appellant Company
from time to time. They have been included at pages 137 to 156 of Vol.
II of the paper book, and according to Mr. Gupta they are inconsistent
with the Board'; case regarding the appellant's entitlement to receive
the amount of energy from the Board. He has pointed out that these
letters do not suggest that the contract demand had been reduced to nil
c in accordance with Annexures 'H' and 'O'. By way of illustration he
relied on the letter dated 31.10.1975 (at page 138 of Vol. II) stating
that the Company's "maximum demand should not exceed 1875 KW".
We do not find any merit in the submission. The letters marked as 'P'
series did not deal with the entitlement of the appellant Company as a
D result of both the Orders-Regulation and Generation. The Regula-
tion Order was of universal application to all the consumers while the
Generation Order applied to only such of them who had their own
generating sets. Under the Regulation Order the contract demand was
reduced by a certain percentage and provided for payment of charges
at penal rate in case of excess consumption. The rate of cut and the
E penal rate for additional consumption did not remain constant, and
were revised from time to time. It appears that as and when the revi-
sion in the rates took place the consumers were informed as to the
effect of the Regulation Order as it stood after modification. Mr.
hacker was right in saying that since the Regulation Order was appli-
cable to all the consumers and letters similar to those marked as
F Annexure 'P' series were being addressed to all of them, there could
not be any objection in the Board sending similar letters to the appel-
lant and others having their private generating sets dealing with the
effect of the Regulation Order alone, without taking into account the
Generation Order. A perusal of these letters fully supports the
respondents' stand that they were being issued with reference to the
c; Regulation Order alone. Further, a close examination of the Genera-
tion Order would show that the maximum permissible limit available
under the Regulation Order had not ceased to be relevant even after
the application of the Generation Order. The entitlement of the appel-
lant due to emergency outage under Proviso (iii) to Clause 3 of the '\ <
Generation Order was limited to the original contract demand as
H reduced by the Regulation Order." It was, therefore, important for the
JJYAJEERAO COTTON MILLS v. ELECTRICITY HOA RD iSHARMA,J.l 1003

appellant to keep in mind that at no point of time it could be entitled to
A
ask for beyond this limit as emergency supply on any ground what-
soever. As this limit fluctuated from time to time on the change in the
percentage of reduction in the Regulation Order, the appellant was
rightly reminded of the latest position in this regard. The learned
counsel for the respondents was also right in saying that these letters
could not have misled the appellant in any manner. The numerous B
letters discussed earlier clearly indicate that the appellant correctly
appreciated its position and repeatedly made requests for emergency
supply under the Generation Order on the assumption that its entitle-
ment had been rendered to zero. The appellant's letter dated 30.5.1977
(at page 16 of Vol. IV) referred to earlier, fully demonstrates that the.
plea raised by the appellant is devoid of any merit. A portion of the
said letter (not dealt with earlier) is in the following terms:
c
"During the period of break down we would request you to
agree to the following arrangement:

i. Before availing Board's power during the emer- D
gency we will intimate the B.E., MPEB, Gwalior as well as
S.E.MPEB, Gwalior and send a copy of our letter to the
Director (Com), MPEB, Jabalpur.

ii(a) In case 6th boiler is out and other boilers are
working satisfactorily we may be allowed to draw power E
upto 1200 KW.

(b) In case 6th boiler is on range and one ofour M. V.
boilers is out we may be allowed to draw power upto 1200
KW.
F
(c) In case 6th boiler is not and one of our M.V.
boilers is also out, we may be allowed to draw ·power upto
1875 KW."

If present stand of the appellant be assumed to be correct, there was
no occasion for it to claim varying quantities of power in changing G
circumstances as mentioned above.

26. It was also urged on behalf of the appellant that the Board's
letter dated 13.10.1980, Annexure 'U', (at page 182, Vol. II)
impugned by the appellant is also inconsistent with the Board's stand
in the present case. By this letter the appellant was informed that the H
1004 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

contract demand of 3490 KW as per the agreements between the
A parties was going to be reduced to 1250 KW under the provisions of
the Generation Order, and on further reduction under the Regulation
Order it would come down to 875 KW only. The appellant was accor-
dingly directed to draw power upto 875 KW with effect from 1.8.1980.
The Board further informed the appellant that no. additional power
B will be supplied during the period of overhauling of the private
generating sets. This part of Annexure 'U' has been set aside by the
High Court on the ground that under Proviso (iii) to Clause 3 of the
Generation Order the Board was under a duty to permit the appellant
to draw additional electricity on satisfaction of the relevant conditions
.for emergency supply, which it could not deny. The Board has not
challenged this part of the High Court's decision, and the same is not
c relevant for purposes of the present appeal. Reliance on behalf of the
appellant has been placed on the earlier part of the Jetter directing it to
limit its drawal to 875 KW. Mr. Gupta explained the situation thus:
The contract demand as per the original agreement and the subsequent
agreements by the date on which the letter was issued admittedly was
D 3490 KW. If the Board's case that the appellant's capacity to generate
electricity from its own sets was assessed at 2500 KW be accepted as
correct, then the appellant would have been held entitled to draw 990
KW only and not 1250 KW as mentioned in the Jetter. Mr. Gupta
invited us to consider this aspect along with the Board's earlier Jetter
Annexure 'R' dated 28.12.1979 (page 158 of Vol. II), informing the
E appellant that additional power to the extent of 190 KW had been
sanctioned. The admitted position in regard to different agreements
between the parties is that initially the parties enterd into a contract
with respect to 1500 KW only which was later raised to 2500 KW. The
Regulation and Generation Orders came into existence at that stage.
In July 1979, a supplementary agreement was executed between the
F parties for supply of additional 800 KW and in December 1979 the
Board further sanctioned 190 KW. The relevant part of the letter
relied on by Mr. Gupta is quoted below:

"The Board has sanctioned 190 KW additional power (over
and above 3300 KW) at 33 KV subject to the following
G conditions:

.
(I) The Contract Demand shall be reduced in terms
of Govt. Control Order No. 1254/2048/XIII/75 dated
4.4.75 after the decision of the Committee headed by the \
Electrical Adviser & Chief Electrical Inspector to Govt. of
H M.P. regarding re-assessment of the capacity of the con-
sumer's generating set is known."
JIYAJEERAO COTTON MILLS v. ELECTRICITY BOARD [SHARMA, J. I 1005

The argument is that the Board could mention about a Committee A
proceeding to assess the capacity of the consumer's captive plant only
if there had not been earlier any assessment. The reduction in the
contract demand under the Generation Order should have been made
after the assessment work was completed, but as a matter of fact, no
such assessment was made and ultimately the letter Annexure 'U'
dated 13.10.1980 was issued arbitrarily without any basis. In absence B
of an assessment of the capacity under the Generation Order, no
reduction was permissible.

27. Mr. Kacker's reply is that since the appellant for the period
of more th.an 4 years was pleading for emergency supply from time to
time on one ground or the other, an internal Committee of S'!perin- C
tending Engineers which had visited the Company's plant on 25.9.1980
suggested that the appellant Company be granted additional power to
the extent of 260 KW on regular basis instead of examining the
grounds relied upon by the appellant every now and then. The latter
part of the letter informing the appellant that it would not in the future
, be supplied additional power on the ground of emergency has been D
referred to in support of this argument. Mr. Kacker further said that
unfortunately the Board was held liable for the emergency supply if
the necessary conditions were satisfied and thus the appellant·has
got double advantage and this cannot be the basis for accepting the
appellant's case. The learned counsel proceeded to say that the letter
Annexure 'R' was issued. in connection with the sanction of 190 KW E
additional power, subject to the Government Orders, and the reduc-
tion thereunder was only a matter of arithmetical calculation which
should have been done without reference to a Committee. The letter
was not sent in connection with any controversy about the assessment
of the generating capacity under the Generation Order, and it cannot
be interpreted in the manner as suggested on behalf of the appellant. It F
was further pointed out that admittedly there. was no question of a
committee headed by the Electrical Adviser and Chief Electrical
Inspector to the Government of Madhya Pradesh to make a fresh
assessment under the Generation Order or to undertake the realistic
assessment of the additional capacity over again. The assessment had
to be made by the divisional Engineer of the Board. It was lastly said G
that this argument addressed by Mr. Gupta before this Court was not
advanced before the High Court nor was the point taken in the writ
petition or any affidavit there. On a consideration of the documents
and the r devant circumstances we agree with Mr. Kacker. The use of
the word "re-assessment" in the letter guoted above instead of "assess-
ment" also supports the respondents' case. The term "re-assessment" H
1006 SUPREME COURT REPORTS I 1988] Supp. 2 S.C.R.

A implies that there had· already been an assessment earlier. Even
interpreting the letter as suggested by Mr. Gupta, the existence of the
earlier assessment by the Divisional Engineer cannot be ignored. If the
appellant was not satisfied with it, it should have taken appropnate
step for getting the same quashed in 1975 itself and should not have
waited for four or five years before approaching the High Court, and
B in the meantime taking the benefit of the provisions regarding
emergency supply on its basis.

28. Now in this background let us come back to the argument of
Mr. Gupta as mentioned earlier in paragraph 16 above. In reply Mr.
Kacker asserted that it is not correct to assume that a machine can
C function on a regular basis only according to the rated capacity as
declared by the manufacturer. By way of illustration he relied upon
the specifications relating to a machine issued by the Bharat Heavy
Electricals Ltd. indicating that the "Peaking capacity" of the machine
with "No time limit" was higher than the "rated output" mentioned.
The learned counsel also analysed the report of the Divisional En-
o gineer along with the data mentioned by the Committee which in his
opinion indicated that the maximum capacity of the appellant's sets
technically feasible was much more than that actually assessed and
could not be less by any calculation even before the 6th boiler was
erected. After the sixth boiler became available the capacity rose to at
least 9700 KW but the Board taking a generous view did not call upon
E the appellant to generate further additional electricity than that
directed earlier.

29. We have heard the learned counsel at considerable length on
this aspect and we think that the question as to what should be
considered the correct feasible capacity of the appellant's sets is one
F involving complex technical knowledge and the High Court (or for that
matter this Court) was well advised not to have attempted to
determine it. We must reiterate the circumstances which appear to be
highly relevant, namely, (i) that the Divisional Engineer who has been
rightly considered by the Generation Order to have sufficient expert
knowledge in this regard reached the conclusion which is under
G challenge in the present case after personally considering the matter
thoroughly along with the Officers of the Company as is apparent by
many of the letters; (ii) the figures collected by the members of the
Committee are not challenged as incorrect or inaccurate; (iii) it is not
suggested that any of the members of the Committee or the Divisional
Engineer or for that matter any Officer of the respondent Board or of
H the State Government had any prejudice or bias against the appellant
JIYAJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA. J.[ 1007

Company; (iv) the appellant did not get an independent assessment of A
its generating sets made by any person having expert knowledge; (v)
the appellant avoided to get the correctness of the assessment verified
by the parellel running test as suggested by the Board; and (vi) the
conduct of both the appellant and the responuent Board as emerging
from the documents placed by the parties on the records of the case
furnish valuable circumstantial evidence in support of the respondents' ll
case. The argument of the appellant challenging the assessment as
illegal must, therefore, be rejected.

30. Mr. Gupta by way of an alternative plea pressed an argu-
ment for granting a limited relief. He urged that even assuming that
the assessment of maximum feasible capacity of the appellant's sets C
was correctly made in 1975 so as to be binding on the appellant, it is
fully established even by the letters of the Board that the position
stood mater;ally altered by November 1979 which called for a
re-assessment. The Board's letters dated 27.1I.1979 (page 157 Vol. II)
and 28. 12. 1979 (page 158, Vol. II), according to the learned counsel.
indicate that irrespective of whether.the initial assessment was good or D
not, the Board accepted the position that steps for re-assessment had
to be taken and after taking into account the circumstances, decided to
grant an ad hoc benefit of 260 KW by its letter Annexure 'U' dated
13. 10. 1980 (page 182, Vol. II), discussed earlier. Although the appel-
lant does not agree that the grievance of the appellant was properly
met by the grant of the additional 260 KW but since this was allowed E
by the Board itself, the relief should have been granted with effect
from November 1979 and not from 1.8. 1980 as mentioned in Annexure
'U'. The plea of the respondent that this additional power was allowed
on account of the recurring demand by the Company for emergency
supply under Proviso (iii) to Clause 3 of the Generation Order has
been challenged as incorrect. It is urged that the letter Annexure 'U' F
granting additional 260 KW over and above 875 KW the appellant was
held entitled to draw, must be read in the background of Annexure 'Q'
dated 27. 11. 1979 (page 157, Vol. II) and Annexure 'R' dated
28. 12. 1979 (page 158, Vol. II). These letters have been discussed
earlier while dealing with another argument. The argument of the
appellant is that the Board had recognised the need of re-assessment G
of the capacity and had decided to entrust the work to a committee and
it must be presumed that the team must have submitted some report.
However, no such report has been placed by the Board on the records
of this case and the suggestion is that it is a case of suppression by the
respondent and the Board cannot be heard to say that the team did not
go into the question of re-assessment. Since the matter was raised by H
1008 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A the appellant in November 1979 which ultimately resulted in the par-
tial relief up to 260 KW about 11 months later, the benefit ought to
have been allowed with effect from November 1979 if not earlier. The
stand of the Board with respect to this additional 260 KW has already
been mentioned earlier. It is argued by the Board that the Generation
Order contemplates only a single assessment leading to a single direc-
B tion and the appellant was not entitled to re-assessment. The word
"re-assessment" in Annexure 'R' was, according to the respondents,
mentioned due to inadvertance or under a misconception of tlie exact
legal position. In any event the additional energy was allowed as the
result of the repeated demand by the appellant for emergency grant.
With a view to meet the situation which was arising every now and
then a generous attitude was taken to allow additional 260 KW. It is
C contended that no further claim can be legitimately founded on this act
of generosity. As a result of the High Court's decision the appellant's
claim for emergency supply was being considered on merits. The ap-
pellant is thus having the advantage of the double benefit with effect
from 1.8.1980, because the Board has neither appealed against that
D part of the High Court judgment, nor has it withdrawn the special
benefit of 260KW, but a further claim cannot be allowed on account of
this sympathetic attitude. In view of our finding that a proper and
binding assessment of the capacity of the appellant's generating sets
was made in 1975 by the Divisional Engineer in pursuance of which the
direction in Annexure 'O' was issued and in view of the further fact
E that on that basis the appellant from time to time asked for and was
allowed emergency relief under Proviso (iii) to Clause 3 of the Genera-
tion Order, the argument of Mr. Kacker appears to be correct. The
appellant has, in our view, failed to establish any right of additional
relief from an earlier date.

F 31. The next point taken on behalf of the appellant is that there
is no sanction in law for charging at the penal rate for the electricity
consumed beyond what is permissible on application of the Generation
Order. Section 22B of the 1910 Act confers powers of framing subordi-
nate legislation on the State Government for the purposes and to the
extent mentioned therein and consequence of contravention of any
G such Order is provided ins. 42(e) mentioned below:

"42. Whoever

H (~) mak.es default in complying with any order issued
JIY AJEERAO COTION MILLS v. ELECTRICITY BOARD [SHARMA, J.l 1009

to him under section 22B or sub-section (2) of section 34;
A
shall be punishable with fine which may extend to one
thousand rupees, and, in the case of a continuing offence or
default, with a daily fine which may extend to one hundred
rupees."
B
The argument is that s. 22B cannot be so construed as to include a
delegated power to impose penalty of the delegate's choice for the
contravention of an order issued under the Section. Since the legisla-
ture itself exercised its legislative power in that field by including s. 42
in the statute, the State had or has no authority to take any further step
for the enforcement of its Order, except by resorting to s. 42. Dealing
with s. 78-A of the 1948 Act which says that in the discharge of its c
functions, the Board shall be guided by such directions on questions of
policy as may be given to it by the State Government. Mr. Gupta
• contended that it cannot be interpreted to effectively clothe the State
to direct the Board to do a thing which it is itself not empowered to do.
The Board, therefore, should _have either prosecuted the appellant D
under s. 42(e) or disconnected the electric supply altogether, but it was
not entitled to demand penal charges. Mr. Kacker countered by saying
that s. 42 of the 1910 Act belongs to the group of sections 39 to 50
dealing with "Criminal Offences and Procedure" as is apparent by the
heading just aboves. 39, and deals with the criminal liability only. The
same set of events may.give rise at the same time to civil rights as well E
as to a criminal offence, and it is not correct to suggest that merely
because provisions are specifically included in the Act dealmg with
criminal liability, the civil liability is deemed to have disappeared. By
way of illustration, a simple case of theft of movable article may be
considered: the owner of the property can set the criminal law in
motion and at the same time may claim the property or compensation F
for it under the civil law. Mr. Kacker appears to be right in his stand
that merely because the appellant became liable to the penalty as
mentioned ins. 42(e) it cannot on that ground defend an additional
demand on account of supply of the extra energy, if otherwise main-
tainable under the law. Besides, s. 48 puts the matter beyond con-
troversy by expressly stating that the penalty imposed by the aforesaid G
section shall be in addition to, and not in derogation of, any liability in
respect of the payment of compensation which the offender may have
incurred.

32 .. While commencing his argument, Mr.. Gupta had indicated
that one of the points on which the appellant relied upon, related to H
1010 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R. ·C
the validity of Clause 3 of the Generation Order mandatorily requiring
A
a consumer to generate maximum feasible electricity from its own
generating set. It was suggested that the provisions in the said Clause
being in excess of the power under s. 22B, were ultra vires. After
completing his argument on the other points he said that he was not
pressing this point. Mr. Kacker, therefore, did not address us on this
B aspect. We may not in these circumstances detain ourselves on this
question except mentioning the decisions in Adoni Cotton Mills v.
A.P. State Electricity Board, [1976] 4 SCC 68; State of U.P. v.
Hindustan Aluminium Corporation, [1979] 3 SCC 229; and New
Central Jute Mills v. U.P. State Electricity Board, [1986] Supp. SCC
581, showing in unambiguous terms that the power is there. S. 22B
permits the State Government to issue an appropriate order for
c regulating the supply, distribution and consumption of electricity. The
expression "regulate" occurs in other statutes also, as for example, the
Essential Commodities Act, 1955, and it has been found difficult to
give the word a precise definition. It has different shades of meaning
and must take its colour from the context in which it is used having
D regard to the purpose and object of the relevant provisions, and as has
been repeatedly observed, the Court while interpreting the expression
must necessarily ·keep in view the object to be achieved and the mis-
chief sought to be remedied. The necessity for issuing the two Orders
arose out of the scarcity of electricity available to the Board for supply-
ing to its customers.- The situation did not leave any option to the
E Board but to make limited supply of electricity to its consumers, and it
must be held to have, in the circumstances the right to stagger or
curtail the supply. The Orders were issued in this background and to
make the direction mentioned therein effective it was considered
essential to impose sanctions which could take any reasonable form;
either disconnection in case of gross violation or the lesser sanction of
F enhanced tariff. By the Order issued under s. 22B and quoted in
paragraph 7 of the judgment in Adoni Cotton Mills' case (supra) the
State Government directed a reduction in supply of electricity to the
extent of 75% of the previous average monthly demand and provided
for payment of the charges for excess consumption at double the tariff
rates. The Electricity Board thereafter proceeded to impose further
G restrictions. Aggrieved by these measures the Adoni Cotton Mills, an
aggrieved consumer approached the Court, but its challenge was
repelled. On behalf of the appellant Mr. Gupta attempted to distin-
guish the decision on the ground that the fixing of a higher tariff for the
. excess consumption was against public policy and that this aspect was
not considered by this Court in Adoni Cotton Mills' case. We do not
H find any merit in this argum@t. The demand of higher charges/tariff
JIYAJEERAO COTION MILLS ,.'ELECTRICITY BOARD [SHARMA, J.[ 1011

for electricity consumed beyond legally fixed limit is a reasonable A
deterrent measure providing an appropriate sanction-not as harsh as
disconnection of supply of energy altogether-and cannot be opposed
on the ground of public policy. We. therefore, hold that none of the
two Orders is illegal or unreasonable.

33. Mr. Gupta alternatively contended that the provisions fixing B
the electric charges at 4 times the normal tariff for the excess con-
sumption are to be found only in the Regulation Order and since there
is no corresponding provision in the Generation Order, there is no
sanction for demanding the penal rate for the electricity consumed
incontravention of the Generation Order. He proceeded to say that
there is no language in either of the two Orders to link them with eacn
other. The different measure taken under the two Orders operate c
under different conditions and circumstances, and they cannot, there·
fore, be lumped together. In reply to the argument of Mr. Kacker that
since the Schedule to the Regulation Order refers to the 'contract
demand' which expression denotes the original contract demand as
reduced by the provisions of both the Regulation Order and the D
Generation Order, leading to the conclusion that the provisions
regarding the payment of penal charges take into account both the
Orders together, Mr. Gupta contended that although it is true that by
reason of the Generation Order the contract demand is reduced but it
cannot be said that a new contract comes into existence for the reduced
amount to justify the argument of Mr. Kacker, because the reduction E
is as a result of operation of law. In other words, the reduced amount
cannot be termed as 'contract' demand as it is in supersession of the
contract demand. The contract demand, therefore, remains the same
as before although there is introduced a statutory bar from drawing it
in full measure. Applying this logic, it was argued by the learned
counsel that the Generation Order has to be kept apart while working F
out the effect of the Regulation Order. He also referred to the· subse-
quent Regulation Order of. 1978 in which the relevant Schedule
prescribes 50 KW as the minimum entitlement which is inconsistent
with the Board's case. It is urged that the argument on behalf of the
Board that the two Orders have to be read together must, therefore,
be rejected. G

24. The reply of Mr. Kacker is three-fold: (i) the point was not
taken in the writ application before the High Court nor in the grounds
-> before this Court and since it is not a pure question of law it should not
be allowed to be raised in the argument; (ii) the two Orders were
issued on the same date with the common object to remedy the same H
1012 SUPREME COURT REPORTS I 1988] Supp. ·2 S.C.R.

problem as is evident from their preambles and so they cannot be read in
A
isolation; and (iii) in any event the Electricity Board in levying ancl
making the impugned demand must be deemed to have exercised its
power under s. 49 of the 1948 Act which it is certainly entitled to. Mr.
Gupta said that it was not right to suggest that the point was not raised
in the High Court. He placed before us the review petition filed in the
B High Court after the disposal of the writ case and relied on the state-
ment in paragraph 3 of the judgment disposing of the review petition.
He stated that the written arguments of the Company consisted of
three parts under the heads 'list of dates', 'notes of argument' and a
'reply'. Mr. Gupta fairly conceded that the point was not taken in the
writ petition before the High Court and he was not in a position to
assert that it was actually argued on behalf of the Company in the first
C argument addressed before the High Court, but he claimed that the
Company did press the point during the final reply. He could not deny
that the point was not taken when the present appeals were filed in this
Court. The judgment of the High Court does not deal with the point.
In the circumstances, the question arises as to whether the question
D should be allowed to be urged now and if so how should it be
answered.

35. Mr. Gupta contended that merely because the two Orders
are issued under the same provision of law on a particular date, they
cannot be dovetailed. The similarity in the preamble of the two Orders
E is described as not of great consequence as it merely borrows the
language from s. 22B. Many Orders are issued under s. 3 of the Essen-
tial Commodities Act, the argument proceeds, and it cannot, therefore,
be suggested that the penalty imposed in one has to be applied to the
other without express language to that effect in either of the two
Orders. We do not think that in view of the fact that the point was not
F taken on behalf of the Company while instituting the writ application
in the High Court and filing the present appeals in this Court, it should
be allowed to be urged at the hearing. Let us assume that the argument
of Mr. Gupta is correct. Immediately the next question would arise as
to whether the Board is otherwise authorised in law to levy and
G demand charges for the excess electricity at the higher rate and if so
whether the Board can be said to have exercised its power in this
regard. Mr. Kacker contended that apart from the power of the state
Government to limit the supply of electricity to the consumers by an
order under s. 22B and to direct payment of penal charges for excess
consumption, the Board is also empowered to impose sanctions by
H charging enhanced tariff and the authority to do so is derived both
JIYAJEERAO COTTON MILLS v. ELECTRICITY BOARD [SHARMA, J .] 1013

under s. 49(3) of the 1948 Act and s. 49(1) read with the original
A
atgeement. The relevant provisions are quoted below:

"49. Provision for the sale of electricity by the Board to
·persons other than licensees.

(1) Subject to the provisions of this act and of regula- B
tions, if any, made in this behalf, the Board may supply
electricity to any person not being a licensee upon such
terms and conditions as the Board thinks fit and may for
the purposes of such supply frame uniform tariffs.

(2)
c
(3) Nothing 'in the foregoing provisions of this
section shall derogate from the power of the Board, if it
considers it necessary or expedient to fix different tariffs
for the supply of electricity to any person not being a
licensee, having regard to the geographical position of any D
area, the nature of the supply and purpose for which supply
is required and any other relevant factors.

(4) In fixing the tariff and terms and conditions for
.the supply of electricity, the Board shall not show undue
preference to any person." E

Reliance was placed on several decisions of this Court and of the High
Courts. It was further contended that it is not essential for the Board
to frame regulations for the exercise of such power. The learned
counsel appears to be right. In Adoni Cotton Mills' case (supra) the
State Government had made an order under s. 22B of the 1910 Act F
.limiting the supply to 75% of the previous consumption as was done in
the present case and directed the payment of punitive rates for excess
consumption. The Board made supplementary orders for placing
further onerous conditions on certain groups of consumers. This was
challenged before the High Court inter alia on the ground that since
the State Government had already acted under s. 22B, the Board G
could not further pass supplementary orders and that in any event
since the Board had not made regulations laying down the principles
under s: 79(j) of the 1948 Act, the orders were bad. Both the points
·• } (alorig with several others) raised by the appellant in that case were
rejected·by this Court. Referring to s. 49(1) of the 1948 Act, the Court
observed that the power to enhance the tariff is included in the Section H
1014 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

and the expression that "the Board may supply electricity ..... upon .
A
such terms and conditions as the Board thinks fit" ins. 49(1) is related
to the terms and conditions of the agreement between the parties.
Sub-section (1) confers power on the Board to supply electricity upon
such terms and conditions as it thinks fit and the terms and conditions
include the power of the Board to enhance the rates. S. 49(3) permits
B the Board to fix different rates for the supply of electricity having
regard to certain conditions mentioned therin and "any other relevant
factors''. It was held that the expression "any other relevant factors"
could not be considered ejusdem generis because there is no genus of
the relevant factors. In New Central Jute Mills Co. Ltd. v. V.P. State
Electricity Board, (supra) the situation again was similar to the present
case. The argument pressed before the Supreme Court inter alia was
c that the Board had no authority to make the demand in excess of the
agreed rate under the agreement. Repelling the contention, the Court
observed in paragraph 4 of the judgment that the agreement itself did
not envision the supply of electricity in violation of the ban imposed by
the State Government in exercise of its power under s. 22B of the 1910
D Act; nor did the agreement stipulate the rate at which such supply
should be charged if notwithstanding the ban against the supply a
consumer drew electricity in excess of the permissible quantity. In the
circumstances, the Board was justified in invoking the power under
s. 49(3) of the 1948 Act which authorised it to supply electricity by
charging different tariff having regard to certain conditions and "any
E other relevant factors''. S. 49(3) was interpreted to be wide enough to
cover a situation where electricity in excess of the quantum is drawn in
disregard of the ban imposed under s. 22B of the 1910 Act. We do not
consider it necessary to multiply the decisions as there does not appear
to be any doubt that either under s. 49( 1) of the 1948 Act read with the
agreement or under s. 49(3) or under both the provisions the respon-
F dent Board is fully authorised to levy and to make a demand at a
higher rate than the usual tariff. It is also clear that it is not essential
for the Board to make regulations indicating the basis for such levy
before making the demand. The appellant has not been able to
successfully show before us that the power by the Board has to be
exercised in a particular manner and by adopting a particular mode. If
G it is assumed that a particular formality has to be completed before a
demand can be legitimately raised, the appellant cannot be allowed to
claim now that the same is lacking in the present case in the absence of
a proper pleading in the original writ petition before the High Court. If
the point had been raised in time, the respondent Board could have
placed relevant materials on the issue. If at the end of the hearing of
H the case in the High Court the point was mentioned in the appellant's
JIY AJEERAO COTTON MILLS v. ELECTRICITY BOARD [SHARMA, l .] 10 i5

final reply and included in the last instalment of its written argument,
it cannot cure the defect in .the pleading specially when the judgment A
of the High Court dismissing the writ application does not deal with
the point. In that view it is not necessary to test the correctness of the.
argument of Mr. Kacker that the appellant's entitlement to receive the
quantum of electricity from the Board at the normal tariff can be -
determined only by a combined reading of the two Orders. We do not, B
therefore, consider it necessary to decide as to what would have been
the precisely correct answer if the point had been properly raised
before the High Court at the appropriate stage.

' 36. We do not find any merit in any of the points urged on behalf
of the appellant. We were informed by the learned counsel for the
parties that the appellant does not accept the correctness of the calcu- C
lations in the letter 'P' series and the question is being examined by the
High Court in a pending case. The appellant also asserts that even
during the period commencing from November 1979 the Company had
pleaded for emergency supply. The High Court has in the present case
directed the prayer for emergency supply to be considered on merits. D
Since these questions are not involved in the present appeals, argu~
) ments relating to these points have not been addressed before us. We,
in the circumstances, make it clear that any observation made in the
present case shall not be treated to have decided those points which
are the subject matter of a pending case in the High Court.
E
37. It was also pointed out at the Bar that several interim orders
were issued by this Court during the pendency of the present appeals
and final direction should be given in regard to them. While granting
special leave this Court by its order dated 5 .11.1982 directed the appel-
lant Company as condition for interim relief of restoration of electric
connection to pay a sum of Rs.50,00,000 within a fortnight and another F
sum of Rs.1,50,00,000 within six months with interest from 1. 1.1983 at
the rate of 12% per annum until payment. The future payment of the
electricity bills was ordered to be made within four weeks from the
service of the bills. The Court also said that the applications made by
the appellants for consideration of emergency supply of the electricity
should be expeditiously disposed of by the Board on merit, and all G
payments by the appellants will be subject to adjustment in the light of
the decision on the emergency applications. By the order dated
24.11.1982 the time for payment of Rs.50,00,000 was extended to
·•; 6.12.1982. With respect to the payment of Rs.1,50,00,000 the Court by
its order dated 6.5-1983 permitted the amount to be deposited in two
equal instalments. The Court also said that if it was ultimately found H
lU 16 SUPREME COURT REPORTS [1988] Supp. 2 S.C.R.

A that the appellant had paid any amount in excess of the total liability,
the Board shall repay such excess amount with interest at the rate of
12% per annum. By a subsequent order dated 23.4.1984 the appellant
was required to pay a sum of Rs.1,28,00,000 to the Board by the 10th
of May, 1984 and to keep the bank guarantee alive till the final dis-
posal of these appeals as condition for continuance of the interim
B prder. During the hearing of the appeal a grievance was made on
behalf of the respondent Board that the bank guarantee had not been
effectively renewed and the learned counsel for the appellant under-
took on behalf of the Company to correct the defect. Subsequently it
was stated at the Bar that proper bank guarantee had been furnished in
accordance with the Court's direction. In view of our present decision
c the respondent Board, besides being entitled to retain the amount
already paid to it in pursuance of this Court's direction, is further
entitled to enforce the bank guarantee. The appellant Company,
,therefore, must arrange to make the payment withount delay, failing
1which the Board shall be entitled to take steps for enforcement of the
bank guarantee. The dispute regarding the appellant's claim to receive
D emergency supply is pending before the High Court. The appellant
shall be entitled to adjustment in the light of the final decision on this
point.

38. In the result, the appeals fail and are dismissed with costs
payable to the respondent No. 1.

.R.S.S. Appeals dismissed .

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